What is Top-up SIP? Should you opt for it while investing in mutual funds?

Systematic Investment Plan (SIP) of mutual funds is now recognised as one of the best ways to accumulate wealth for long-term goals. The key to benefiting from investing through SIP is to start early. While investors may start a monthly SIP with a small amount, they can increase the monthly contribution gradually through a facility known as SIP top-up, depending on the growth of their income.

SIP top-up allows an investor, who has signed up for a SIP, to choose to increase the amount of her or his SIP instalment by a fixed sum or percentage at predetermined intervals. In a traditional SIP, investors are not given the choice to raise their investment during the SIP’s term. If they wanted to increase their contribution, they had to open a new SIP or make a one-time lump sum payment.

“A top-up SIP makes sure that investors are saving in line with their income and that they are able to keep up with the regular increases in income. By availing of top-up SIP facility, an investor has a better chance of outpacing inflation and meeting their financial objectives in a timely manner,” says Abhinav Angirish, founder of, Investonline.in

For example, the investor starts a SIP on December 1 for Rs 10,000. He can opt to increase future SIP investments after every quarter, half-year, or annually by either a preset sum, say Rs. 500, or by a predetermined percentage increase, say 10%.

The top-up SIP plan would give an investor the same flexibility in terms of tenure and investment amount as the traditional SIP plan.

Fight inflation

Going for the top-up facility automatically adjusts for inflation and handles an increase in income, such as a raise in salary each year. The majority of salaried individuals receive a raise every year; as a result, they can invest additional income without compromising on their lifestyle.

“By using a SIP Top-up, you can speed up the process of building a superior corpus and getting closer to achieving your financial goals sooner. It helps your annual savings keep up with inflation while helping you strike the right balance between being disciplined and having some leeway in your financial decisions,” says Abhinav Angirish.